Gitson et al v. Trader Joe's Company

Filing 45

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS 35 MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO STRIKE by Judge William H. Orrick. The motion to dismiss is DENIED as to the plaintiffs' first cause of action to the extent that it is pr edicated on violations of the Sherman Law. The plaintiffs' second through sixth causes of action under the UCL, FAL and CLRA are DISMISSED WITH LEAVE TO AMEND. The plaintiffs' seventh cause of action for restitution is DISMISSED WITH PREJUDICE. Paragraphs 58-67 of the FAC are ordered stricken. The plaintiffs may file an amended complaint within 20 days of this Order. (jmdS, COURT STAFF) (Filed on 10/4/2013)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
AMY GITSON, et al.,

7

Case No. 13-cv-01333-WHO

Plaintiffs,
8
v.
9
TRADER JOE‟S COMPANY,

10

Defendant.

Re: Dkt. No. 35

11
United States District Court
Northern District of California

ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S
MOTION TO DISMISS OR, IN THE
ALTERNATIVE, TO STRIKE

12
INTRODUCTION

13

Plaintiffs Amy Gitson, Christine Vodicka and Deborah Ross filed their First Amended

14
15

Complaint (“FAC”) on June 28, 2013, alleging that various of Defendant Trader Joe‟s Company‟s

16

products are misbranded or bear misleading labels. Dkt. No. 31. Trader Joe‟s has moved to

17

dismiss the FAC or, in the alternative, to strike specified paragraphs of the FAC. Dkt. No. 35.

18

Trader Joe‟s motion is GRANTED IN PART and DENIED IN PART.
BACKGROUND

19
20

The FAC states that the plaintiffs‟ case has “two facets:” First, the plaintiffs allege that the

21

packaging and labeling on various Trader Joe‟s products violate California‟s Sherman Law, which

22

adopts and incorporates the federal Food Drug & Cosmetic Act (“FDCA”).1 These alleged

23

violations of the Sherman Law give rise to the plaintiffs‟ first cause of action for violations of the

24

unlawful prong of the California Unfair Competition Law (“UCL”). Bus. & Prof. Code § 17200.

25

Second, apart from being unlawful under the Sherman Law, the plaintiffs allege that Trader Joe‟s

26
27
28

1

“All food labeling regulations and any amendments to those regulations adopted pursuant to the
federal act, in effect on January 1, 1993, or adopted on or after that date shall be the food labeling
regulations of this state.” Cal. Health & Safety Code § 110100(a) (“Sherman Law”).

1

labeling and packaging is misleading, deceptive, unfair and fraudulent. This second facet gives

2

rise to the plaintiffs‟ second through sixth causes of action for violations of the unfair prong of the

3

UCL (second cause of action), violations of the fraudulent prong of the UCL (third cause of

4

action), misleading and deceptive advertising in violation of the False Advertising Law, Bus. &

5

Prof. Code § 17500, (fourth cause of action), untrue advertising in violation of the False

6

Advertising Law (fifth cause of action), and violations of the Consumers Legal Remedies Act,

7

Cal. Civ. Code § 1750, (sixth cause of action).2 As stated below, the motion to dismiss is

8

DENIED as to the first facet of the plaintiffs‟ FAC, comprising the claims under the unlawful

9

prong of the UCL, and GRANTED WITH LEAVE TO AMEND as to the second facet.
The FAC identifies and defines eight specific products allegedly purchased by the

10

United States District Court
Northern District of California

11

plaintiffs as “Purchased Products:” French Village Mixed Berry Nonfat Yogurt, French Village

12

Strawberry Nonfat Yogurt, Greek Style Vanilla Nonfat Yogurt, Organic Chocolate Soy Milk,

13

Dark Chocolate Peanut Butter Salted Caramel Truffles, Organic Lowfat Strawberry Yogurt,

14

Organic Soy Milk and Enchilada Sauce. FAC ¶ 2. The term Purchased Products is not used in the

15

factual allegations or in the causes of action. Instead, the causes of action refer to Misbranded

16

Food Products (see e.g., FAC ¶¶ 14-16, 18, 31, 35), a term not defined anywhere in the FAC. The

17

FAC elsewhere alleges which of the plaintiffs purchased which of the products at issue, but leaves

18

out Organic Chocolate Soy Milk, suggesting that none of the plaintiffs purchased that product.

19

FAC ¶ 95.
The FAC explains that the products at issue fit into three categories, those that allegedly:

20
21

1. Are unlawfully and misleadingly labeled with the ingredient evaporated cane juice or

22
23
24
25
26
27
28

2

The FAC includes a seventh cause of action for Restitution Based on Unjust Enrichment/QuasiContract. FAC ¶¶ 173-76. Trader Joe‟s moves to dismiss this cause of action, arguing that i)
restitution is a form of relief; not a freestanding cause of action and ii) it is duplicative of the
plaintiffs‟ other claims. In response, the plaintiffs “agree to dismiss their seventh cause of action
without prejudice to re-file it should their other claims be dismissed at some later point in this
litigation, rendering a claim for unjust enrichment non-duplicative.” Dkt. No 41 at 23.
“Restitution based on unjust enrichment/quasi contract does not state an independent cause of
action that can stand on its own.” Ang v. Bimko Bakeries USA, Inc., No. 13-cv-1196-WHO, slip
op. at 18 (N.D. Cal. Sept. 25, 2013). Accordingly, the Court DISMISSES the seventh cause of
action WITH PREJUDICE.
2

organic evaporated cane juice instead of sugar (the “Cane Juice Products”);

1

2. contain added preservatives or artificial colors despite statements on the label stating
otherwise (the “No Additives Products”); and

2
3
4

3. are labeled “milk,” but do not comply with the standardized definition for milk
promulgated by the Food and Drug Administration (the “Soy Milk Products”).

5

FAC ¶ 13. The FAC does not clearly state which of the accused products belong in which

6

category. See, e.g., FAC ¶¶ 43-51 (section entitled “Defendant‟s Unlawful and Misleading

7

Evaporated Cane Juice Claims” does not identify a single specific product), ¶¶ 73-82 (section

8

entitled “Defendant Violated the Standard of Identity for Milk” identifies only one product).3 Nor

9

does the FAC specify which category of products relates to any given cause of action. Instead,
each cause of action refers to the undefined term Misbranded Products, leaving the Court to cross-

11
United States District Court
Northern District of California

10

reference the various sections of the plaintiffs‟ 176-paragraph FAC in order to assess the

12

sufficiency of the plaintiffs‟ allegations.

13

With the foregoing in mind, it appears that the plaintiffs allege that Trader Joe‟s Greek

14

Style Vanilla Nonfat Yogurt, French Village Strawberry Nonfat Yogurt, French Village Mixed

15

Berry Nonfat Yogurt, and Organic Lowfat Strawberry Yogurt are unlawfully and misleadingly

16

labeled with the ingredient evaporated cane juice or organic evaporated cane juice. The plaintiffs

17

advance two theories: i) that the FDA‟s Standard of Identity for yogurt (21 CFR § 131.200)

18

prohibits the use of evaporated cane juice in yogurt (FAC ¶ 44), and ii) that evaporated cane juice

19

is an uncommon or unusual name for sugar, in violation of 21 C.F.R. §§ 101.3 and 102.5, which

20

“prohibit[] manufacturers from referring to ingredients by anything other than their common and

21

usual names.” FAC ¶ 46.

22

The plaintiffs‟ allegations regarding artificial color or preservatives appear to relate to

23

French Village Strawberry Nonfat Yogurt and Dark Chocolate Peanut Butter Salted Caramel

24
25
26
27
28

3

The FAC also uses the term “Substantially Similar Products,” defined as “Trader Joe‟s products
that (i) make the same label representations, as described herein, as the Purchased Products, (ii)
contain the same or most of the same ingredients as the Purchased Produces, and/or (iii) violate
the same regulations of the Sherman Food Drug & Cosmetic Law, California Health & Safety
Code § 109875, et seq. as the Purchased Products.” FAC ¶ 3. The FAC does not use the term
Substantially Similar Products after defining it. The Court will not refer to it either.
3

1

Truffles products. FAC ¶¶54 (“Trader Joe‟s no coloring or preservatives claims are false because

2

its products contain undisclosed coloring agents and preservatives. For example, the Trader Joe‟s

3

French Village Strawberry Nonfat Yogurt purchased by the plaintiffs utilized beet juice as an

4

added artificial coloring agent.”), 55 (“Similarly, the Trader Joe‟s Dark Chocolate Peanut Butter

5

Salted Caramel Truffles purchased by Plaintiffs contained tocopherols, a chemical preservative.”).

6

Finally, the plaintiffs‟ allegations regarding products improperly labeled “milk”

7

presumably apply to Trader Joe‟s Organic Soy Milk and Organic Chocolate Soy Milk, the only

8

products which could conceivably “represent[] to be a form of milk. FAC ¶¶ 13(c), 82 (“The

9

Plaintiffs were misled by the Defendant‟s use of the term milk in connection with its soy

10

United States District Court
Northern District of California

11
12

beverages.”).
The FAC makes no allegations about Enchilada Sauce, aside from noting that plaintiff
Vodicka purchased it. FAC ¶ 95.

13

The plaintiffs bring this action on behalf of themselves and a class defined as

14

All persons in the United States or, in the alternative, all persons in
the state of California who, within the last four years, purchased
Defendant‟s food products 1) labeled with the ingredient,
“Evaporated Cane Juice” or “Organic Evaporated Cane Juice;” 2)
containing added preservatives or artificial colors; or 3) represented
to be a form of milk but failing to satisfy the standard of identity for
milk.

15
16
17
18

FAC ¶ 106.

19

LEGAL STANDARD

20

A. Motion to dismiss

21

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the

22

pleadings fail to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). The

23

Court must accept factual allegations in the complaint as true and construe the pleadings in the

24

light most favorable to the nonmoving party, Manzarek v. St. Paul Fire & Marine Ins. Co., 519

25

F.3d 1025, 1031 (9th Cir. 2008), drawing all reasonable inferences from those facts in the

26

nonmoving party‟s favor. Knievel v. ESPN, 393 F.3d 1068, 1080 (9th Cir. 2005). A complaint

27

may be dismissed if it does not allege enough facts to state a claim to relief that is plausible on its

28

face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has facial plausibility when
4

1

the pleaded factual content allows the court to draw the reasonable inference that the defendant is

2

liable for the misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). However, a

3

complaint does not suffice “if it tenders naked assertions devoid of further factual enhancement.

4

Id. (quotation marks and brackets omitted). If a motion to dismiss is granted, a court should

5

normally grant leave to amend unless it determines that the pleading could not possibly be cured

6

by allegations of other facts. Cook, Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247

7

(9th Cir. 1990).

8

In addition, when a claim is grounded in fraud, Federal Rule of Civil Procedure 9(b)

9

requires a party to “state with particularity the circumstances constituting fraud or mistake,”
including “the who, what, when, where, and how of the misconduct charged.” Vess v. Ciba-Geigy

11
United States District Court
Northern District of California

10

Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (internal quotation marks omitted). The purpose

12

of Rule 9(b) is to give defendants sufficient notice of the alleged fraudulent conduct so that

13

defendants can adequately defend against the allegations. Kearns v. Ford Motor Co., 567 F.3d

14

1120, 1124 (9th Cir. 2009).

15

B. Motion to strike

16

Federal Rule of Civil Procedure 12(f) provides that a court “may strike from a pleading an

17

insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R.

18

Civ. P. 12(f). The function of a motion to strike under Rule 12(f) is to avoid the expenditure of

19

time and money that must arise from litigating spurious issues by dispensing of those issues before

20

trial. See Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other grounds,

21

510 U.S. 517 (1994). “As with motions to dismiss, when ruling on a motion to strike, the Court

22

takes the plaintiff‟s allegations as true and must liberally construe the complaint in the light most

23

favorable to the plaintiff.” Stearns v. Select Comfort Retail Corp., 763 F.Supp.2d 1128, 1140

24

(N.D. Cal. 2010) (citation omitted). Motions to strike “are generally disfavored because they are

25

often used as delaying tactics and because of the limited importance of pleadings in federal

26

practice.” Rosales v. Citibank, 133 F.Supp.2d 1177, 1180 (N.D. Cal. 2001). In most cases, a

27

motion to strike should not be granted unless “the matter to be stricken clearly could have no

28

possible bearing on the subject of the litigation.” Platte Anchor Bolt, Inc. v. IHI, Inc., 352
5

1
2
3

F.Supp.2d 1048, 1057 (N.D. Cal. 2004).
DISCUSSION
Trader Joe‟s moves to dismiss the FAC, arguing that i) the plaintiffs lack standing to assert

4

claims related to products they have not purchased; ii) the plaintiffs have failed to plead their

5

claims with particularity for many of the accused products; iii) the Cane Juice and Soy Milk

6

Claims fail the reasonable consumer test; iv) the FDA does not prohibit the use of evaporated cane

7

juice in yogurt; v) the plaintiffs‟ claims are preempted to the extent they attempt to indirectly

8

enforce the Food, Drug and Cosmetic Act; and vi) the Cane Juice and Soy Milk Claims should be

9

dismissed or stayed under the primary jurisdiction doctrine. Trader Joe‟s has also moved to strike
certain allegations as immaterial. The Court addresses each argument in turn. Because these

11
United States District Court
Northern District of California

10

arguments dispose of the second through sixth causes, but not the first cause of action (alleging

12

violations of the unlawful prong of the UCL), the Court separately addresses that cause of action.

13

A. Standing to assert claims related to products not purchased by the plaintiffs

14

In addition to the specific Trader Joe‟s product purchased by the plaintiffs, the plaintiffs

15

purport to represent a class of people who have purchased other unspecified Trader Joe‟s products.

16

FAC ¶ 106. Trader Joe‟s argues that the plaintiffs lack standing to assert claims based on these

17

products as the plaintiffs did not purchase these products and have suffered no injury from these

18

products. The plaintiffs respond that whether they can represent a class of people who bought

19

different products is a question for class certification; not a standing issue. The Court need not

20

address the plaintiffs‟ standing to assert claims regarding products they did not purchase at this

21

time. As described below in section B(i), the plaintiffs‟ failure to identify these products in any

22

meaningful way dooms their efforts to bring those products into this action.

23

B. Failure to plead claims with particularity

24

The plaintiffs allow that their causes of action, other than the cause of action under the

25

unlawful prong of the UCL, are grounded in fraud and thus subject to the heightened pleading

26

requirements of Rule 9(b). Dkt. No. 41 at 11 (“while Defendant is correct that some of Plaintiffs‟

27

claims sound in fraud, not all of them do, i.e., Plaintiffs‟ claim that Defendant sold illegal products

28

which implicates the UCL‟s „unlawful‟ prong”). The plaintiffs‟ claims regarding the unspecified
6

1

products, Organic Lowfat Strawberry Yogurt and Enchilada Sauce, and the No Additives claims

2

are not pleaded with the particularity required under Federal Rule of Civil Procedure 9(b) and the

3

second through sixth causes of action as to these products are dismissed with leave to amend.
1. Unspecified Products

4
5
6
7

The plaintiffs purport to represent a class of people who have purchased unspecified
Trader Joe‟s products:
1)

labeled with the ingredient, evaporated cane juice or organic evaporated cane
juice;

9

2)

containing added preservatives or artificial colors; or

10

3)

represented to be a form of milk but failing to satisfy the standard of identity for
milk”

8

United States District Court
Northern District of California

11
12

(collectively, the “Unspecified Products”). FAC ¶ 106. These categories mirror the categories of

13

the specific products purchased by the plaintiffs, but the plaintiffs have pleaded no facts regarding

14

the Unspecified Products, such as what their labels state or even what kinds of products these

15

categories include. As a result, the allegations as to the Unspecified Products do not meet the

16

heightened pleading requirements of Rule 9(b) and are dismissed with leave to amend. See, e.g.,

17

Thomas v. Costco Wholesale Corp., 12-cv-02908 EJD, 2013 WL 1435292 (N.D. Cal. Apr. 9,

18

2013) (dismissing claims as to unspecified products where the allegations “do not provide a clear

19

and unambiguous account of the allegedly fraudulent, deceptive, or misrepresentative statements

20

with the specificity and particularity required by Rule 9”); Cf Trazo v. Nestle USA, Inc., 12-cv-

21

2272 PSG, 2013 WL 4083218, *13 (N.D. Cal. Aug. 9, 2013) (striking class allegations that

22

“encompass all products with labels containing certain key words (i.e., „health‟ and „all natural‟),

23

or having certain attributes (having the „wrong serving size‟ or containing „unlawful slack fill‟),

24

but does not limit the class to certain product lines that are sufficiently similar in nature”).

25

2. Organic Lowfat Strawberry Yogurt and Enchilada Sauce

26

As Trader Joe‟s points out, the FAC‟s only reference to Organic Lowfat Strawberry

27

Yoghurt and Enchilada Sauce is that they were purchased by plaintiff Vodicka. FAC ¶ 95. There

28

is no reference to the labels of these products, let alone any allegation specifying how they are
7

1

misbranded or misleading. Dkt. No. 35 at 20. The plaintiffs‟ allegation that they “describe these

2

labels and how they are misleading” does not relieve the plaintiffs of the obligation to actually do

3

so. FAC ¶ 5.

4

The plaintiffs attempt to cure this deficiency in their Opposition, asserting that Organic

5

Lowfat Strawberry Yoghurt “illegally lists evaporated cane juice as an ingredient” and Enchilada

6

Sauce “contains the unnatural ingredients of maltodextrin and xanthan gum.” Dkt. No. 41 at 15.

7

But the plaintiffs cannot rely on new allegations in their Opposition to remedy holes in their

8

complaint. Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003) (“In determining the

9

propriety of a Rule 12(b)(6) dismissal, a court may not look beyond the complaint to a plaintiff‟s
moving papers, such as a memorandum in opposition to a defendant‟s motion to dismiss.”)

11
United States District Court
Northern District of California

10

(internal quotations and citations omitted). The plaintiffs‟ claims regarding Organic Lowfat

12

Strawberry Yoghurt and Enchilada Sauce are dismissed with leave to amend.

13
14

3. No Additives Claims
The plaintiffs‟ allegations regarding artificial color or preservatives relate to the French

15

Village Strawberry Nonfat Yogurt and Dark Chocolate Peanut Butter Salted Caramel Truffles

16

products. FAC ¶¶ 54-55. The plaintiffs allege that French Village Strawberry Nonfat Yogurt

17

“utilized beet juice as an added artificial coloring agent” (FAC ¶ 54) and that Dark Chocolate

18

Peanut Butter Salted Caramel Truffles contain “tocopherols, a chemical preservative.” FAC ¶ 55.

19

The plaintiffs allege that they “saw and relied on the Defendants‟ false representations that all

20

Trader Joe‟s branded products lacked artificial coloring or preservatives.” FAC ¶ 97. But the

21

plaintiffs do not specify any alleged misrepresentations made in connection with either of these

22

products. Instead, the plaintiffs allege generally that

23
24
25

Trader Joe‟s falsely pledges to its customers that its customers that
its products are free from coloring or preservatives. This pledge is:
All Products In The Trader Joe‟s Label Promise:
NO artificial flavors, colors or preservatives.
FAC ¶ 53. The plaintiffs‟ broad and general allegations do not satisfy Rule 9(b). They do not

26
specify where or when Trader Joe‟s allegedly made this representation, much less that Trader
27
Joe‟s made this representation in connection with French Village Strawberry Nonfat Yogurt or
28
8

1

Dark Chocolate Peanut Butter Salted Caramel Truffles. Moreover, the Court‟s review of the

2

product labels at issue indicates that neither product makes a representation relevant to these

3

allegations. The label for French Village Strawberry Nonfat Yogurt does not contain any claim

4

about artificial colors or artificial coloring agents. Dkt. No. 36-3. 4 The label for Dark Chocolate

5

Peanut Butter Salted Caramel Truffles states “no artificial colors or flavors” (Dkt. No. 36-12), but

6

the plaintiffs‟ allegation is that the truffles contain “tocopherols, a chemical preservative,” not that

7

they contain artificial colors or flavors. FAC ¶ 55 (emphasis added).
The plaintiffs‟ allegation that Trader Joe‟s “website and all linked websites constitute the

8

labeling of any product bearing this web address” does not save this claim. Id. ¶ 11; see also id. ¶

10

57 (“Defendant has also made the same illegal claims on its websites and advertising in violation

11
United States District Court
Northern District of California

9

of federal and California law.”). Notably, the FAC does not allege that the plaintiffs ever saw

12

Trader Joe‟s website or what the website states, and the plaintiffs offer no authority for their

13

allegation that “as a matter of law, [Trader Joe‟s] website and all linked websites constitute the

14

labeling of any product bearing this web address.” Moreover, based on the Court‟s review, the

15

product labels at issue do not reference Trader Joe‟s website. The No Additives Claims thus do

16

not satisfy Rule 9(b) and are dismissed with leave to amend.

17

C. The Cane Juice and Soy Milk Claims fail the reasonable consumer test.

18

Claims under the UCL, FAL and CLRA are governed by the “reasonable consumer” test

19

“which focuses on whether members of the public are likely to be deceived.”5 Werbel ex rel. v.

20

Pepsico, Inc., 09-cv-04456 SBA, 2010 WL 2673860, *3 (N.D. Cal. July 2, 2010) (citing Williams

21

v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008)). Whether a business practice is likely to

22

deceive members of the public generally presents a question of fact, but “where a court can

23
24
25
26
27
28

4

The Court grants Trader Joe‟s unopposed request that the Court take judicial notice of the
product labels at issue. Dkt. No. 36. The labels are incorporated by reference into the FAC and
the plaintiffs have not opposed Trader Joe‟s request to take judicial notice or otherwise disputed
that these are the labels referenced in the FAC. See, e.g., Samet v. Procter & Gamble Co., 12-cv01891 PSG, 2013 WL 3124647, *2 (N.D. Cal. June 18, 2013) (taking judicial notice of food
product labels at motion to dismiss stage).
5
As noted below, the reasonable consumer test does not apply to the plaintiffs‟ claims under the
unlawful prong of the UCL predicated on Sherman Law violations.
9

1

conclude as a matter of law that members of the public are not likely to be deceived by the product

2

packaging, dismissal is appropriate.” Werbel, 2010 WL 2673860, *3.
1. The reasonable consumer test applies to the plaintiffs’ claims.

3

The plaintiffs cite In re Steroid Hormone Prod. Cases, 181 Cal. App. 4th 145, 157, 104

4
5

Cal. Rptr. 3d 329, 339 (2010) for the proposition that “the reasonable consumer standard doesn‟t

6

apply when the product at issue is unlawful to sell or possess.” Dkt. No. 41 at 16. The plaintiffs

7

are mistaken. In re Steroid Hormone Prod. explicitly applied the reasonable person standard and

8

found that it had been satisfied because a reasonable person would not knowingly purchase a

9

Schedule III controlled substance, 6 which is illegal to possess without a prescription. 181 Cal.
App. 4th at 157, 104 Cal. Rptr. 3d at 339 (“the question that must be answered in this case is

11
United States District Court
Northern District of California

10

whether a reasonable person would find it important when determining whether to purchase a

12

product that it is unlawful to sell or possess that product”) (emphasis added). That is a far cry

13

from this case. The plaintiffs are alleged to have purchased mislabeled food products, not

14

Schedule III controlled substances. The Court will not presume that a reasonable person would

15

not have purchased the products at issue had the person known of the alleged mislabeling.
2. Soy Milk Claims

16
17

The plaintiffs allege that they were misled to believe that Organic Soy Milk complies with

18

the FDA‟s standardized definition of milk: “the lacteal secretion, practically free from colostrum,

19

obtained by the complete milking of one or more healthy cows,” and that Organic Soy Milk

20

provides comparable quality, taste, and nutritional benefits as cow‟s milk. FAC ¶¶ 75-77, 82; 21

21

C.F.R. § 131.110. Trader Joe‟s argues that a reasonable consumer could not have been misled that

22

the Organic Soy Milk actually contains “lacteal secretions from healthy cows” and offers the same

23

qualities as cow‟s milk because i) the label for Organic Soy Milk explicitly states that it is

24

LACTOSE & DAIRY FREE on its front and back and states that soy milk “has become a very

25

popular alternative to dairy milk” (Dkt. No. 36-10) and ii) “soy milk has a well-established

26

meaning separate and apart from the word milk.”

27
6

28

Schedule III controlled substances are drugs whose abuse “may lead to moderate or low physical
dependence or high psychological dependence.” 21 U.S.C. § 812(b)(3)(C)
10

1

The Court rejects the argument that the term “soy milk,” standing alone, is so well-

2

established that a reasonable consumer, as a matter of law, could not believe that it is some type of

3

cow‟s milk. Indeed, the FDA warning letters advise against using the term at all. But here, the

4

allegedly misleading term is coupled with the explicit disclaimer on the product label that Organic

5

Soy Milk is LACTOSE & DAIRY FREE and is an “alternative to dairy milk.” Dkt. No. 36-10. It

6

is not plausible to claim, as the plaintiffs do, that a reasonable consumer would believe that

7

Organic Soy Milk is cow‟s milk and has the same qualities as cow‟s milk in light of the

8

prominence of the disclaimer on the label.
The Court is sensitive to the Ninth Circuit‟s guidance that it is a “rare situation” in which

10

granting a motion to dismiss on a deceptive labeling claim is appropriate. Williams, 552 F.3d at

11
United States District Court
Northern District of California

9

939. However, Williams recognized that dismissal is appropriate where “the advertisement itself

12

made it impossible for the plaintiff to prove that a reasonable consumer was likely to be

13

deceived.” Id. In support, Williams cited its own opinion in Freeman v. Time, Inc., 68 F.3d 285,

14

288-89 (9th Cir. 1995), where the court affirmed dismissal of a challenge to a mailer that

15

suggested the plaintiff had won a million dollar sweepstakes where the mailer explicitly stated

16

multiple times that the plaintiff would only win the prize if he had the winning sweepstakes

17

number.

18

This is one of those rare cases where the accused label itself makes it impossible for the

19

plaintiff to prove that a reasonable consumer is likely to be deceived. Similar to Freeman, the

20

packaging at issue here explicitly states that Organic Soy Milk is not what the plaintiffs allegedly

21

believed that it was: cow‟s milk. The packaging states, on its front and back, that Organic Soy

22

Milk is “LACTOSE & DAIRY FREE,” and, on its side, that it is an “alternative to dairy milk.”

23

Dkt. No. 36-10. In light of this explicit disclaimer, a reasonable consumer could not believe that

24

Organic Soy Milk is cow‟s milk and has the same qualities as cow‟s milk. See also Werbel, 2010

25

WL 2673860, *4 (no reasonable consumer would believe that “Crunch Berries,” described on the

26

packaging as “sweetened corn and oat cereal” and shown as brightly-colored balls of cereal, are

27

made from real berries); Videtto v. Kellogg USA, 08-cv-01324-MCE DAD, 2009 WL 1439086

28

(E.D. Cal. May 21, 2009) (“fanciful use of a nonsensical word [Froot] cannot reasonably be
11

1

interpreted to imply that the Product contains or is made from actual fruit”).
In opposition, the plaintiffs argue that Food and Drug Administration disagrees that the

2
3

term soy milk is not misleading because, “[a]s set forth in the various FDA warning letters”

4

excerpted in the FAC, the FDA views the term soy milk “as violating the requirement that food

5

manufacturers like Defendant use the common and usual name of an ingredient.” Dkt. No. 41 at

6

17. The plaintiffs place too much reliance on the FDA warning letters, which are “informal and

7

advisory.” FDA Regulatory Procedures Manual § 4-1-17; CytoSport, Inc. v. Vital

8

Pharmaceuticals, Inc., 894 F. Supp. 2d 1285, 1293-94 (E.D. Cal. Sept. 6, 2012) (“FDA warning

9

letters are informal and advisory, and do not amount to an FDA action.”). The warning letters
form the basis of the Court‟s opinion that plaintiffs may proceed under the unlawful prong of the

11
United States District Court
Northern District of California

10

UCL, discussed below. But the Ninth Circuit has instructed that the Court must consider the

12

advertising that the consumer would see in order to determine whether a reasonable consumer

13

would be deceived. See Freeman, 68 F.3d at 288-89. The warning letters simply do not bear

14

weight in light of the explicit, prominent disclaimer that Organic Soy Milk is LACTOSE &

15

DAIRY FREE and an alternative to dairy.

16

3. Cane Juice Claims

17

Trader Joe‟s argues that a reasonable consumer would not believe that the accused

18

products containing evaporated cane juice do not contain sugar, given that each product expressly

19

discloses its sugar content. The Court agrees. The Nutrition Facts section of each product label

20

discloses that each Cane Juice Product has between 24 and 27 grams of “sugars” per serving. See

21

Dkt. Nos. 36-3, 36-4, 36-5, 36-8. This defeats the plaintiffs‟ allegation that they “would not have

22

purchased Defendant‟s Misbranded Food Products had Plaintiffs known that the Misbranded Food

23

Products contained sugar or dried cane syrup.” ¶ 98.
In their Opposition, the plaintiffs state that Trader Joe‟s “misses the point of Plaintiffs‟

24
25

claim. The issue is not that the product has sugar in it; it‟s that Defendant has added sugar to its

26

product without telling consumers it has done so.” Dkt. No. 41 at 18 (emphasis in original).

27
28

7

http://www.fda.gov/ICECI/ComplianceManuals/RegulatoryProceduresManual/default.htm
12

1

Trader Joe‟s is forgiven for misunderstanding the plaintiffs‟ claim, because the Court has the same

2

confusion. The FAC alleges that the plaintiffs would not have purchased the products if they had

3

known that they contained sugar. FAC ¶ 98. Nowhere does the FAC express any concerns about

4

added sugar. Tellingly, the plaintiffs do not actually cite the FAC for this supposed allegation.

5

The plaintiffs will be given the opportunity to assert this allegation in an amended complaint, but

6

the allegation it has asserted in the FAC fails the reasonable consumer test.

7

D. Preemption

8

Trader Joe‟s argues that “Plaintiffs‟ state-law claims should be dismissed as preempted to
the extent they seek to establish that food labels and advertisements were „misleading‟ based on

10

the FDA‟s warning letters and other guidance materials.” Dkt. No. 35 at 31; Dkt. No. 43 at 18

11
United States District Court
Northern District of California

9

(arguing that the plaintiffs are precluded from asserting that “the FDA‟s informal interpretations of

12

its own regulations dictate that state false advertising laws have been violated”). Trader Joe‟s also

13

moves to strike paragraphs 4, 27-42, 47-49, 51, 59-67, 74-76 and 81-82 of the FAC, which relate

14

to the FDA‟s warning letters and guidance activities.

15

The plaintiffs‟ claims are not preempted. To the extent that the plaintiffs‟ refer to the FDA

16

guidance and warning letter to bolster their arguments that the product labels are misleading, the

17

plaintiffs‟ claims are in line with the FDA‟s current thinking and are thus not attempts to force

18

Trader Joe‟s to do anything inconsistent or incompatible with federal food regulations. See, e.g.,

19

Kane v. Chobani, Inc., 12-CV-02425-LHK, 2013 WL 3703981, *16 (N.D. Cal. July 12, 2013)

20

(rejecting similar preemption argument based on FDA guidance and warning letters because

21

“Plaintiffs are not seeking to establish a requirement which is not identical to the FDA‟s

22

requirements”); Ivie v. Kraft Foods Global, Inc., 12-cv-02554-RMW, 2013 WL 685372, *12

23

(N.D. Cal. Feb. 25, 2013) (“The FDA‟s 2009 industry guidance statement is relevant to the issue

24

of whether these labels could be deceptive or misleading to a reasonable consumer, and there is no

25

risk of undermining the FDA‟s rulemaking expertise in allowing a fact finder to make this

26

determination.”).

27
28

At the pleading stage, the allegations regarding the FDA guidance and warning letters
appear relevant to the subject of the litigation. The Court declines to strike the plaintiffs‟
13

1

allegations regarding the FDA.

2

E. The Primary Jurisdiction Doctrine

3

Trader Joe‟s argues that the claims regarding evaporated cane juice and soy milk should be

4

dismissed or stayed under the primary jurisdiction doctrine. The primary jurisdiction doctrine

5

“allows courts to stay proceedings or to dismiss a complaint without prejudice pending the

6

resolution of an issue within the special competence of an administrative agency.” Clark v. Time

7

Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008).

8
9

Another Judge in this District recently declined to dismiss allegations regarding use of the
term evaporated cane juice under the primary jurisdiction doctrine, explaining that “the FDA has
issued guidance (albeit informal guidance) regarding whether ECJ is consistent with FDA

11
United States District Court
Northern District of California

10

requirement. At this stage, the Court is not persuaded that the Court will be required to resolve an

12

issue of „first impression‟ without the benefit of the FDA‟s opinion.” Kane, 2013 WL 3703981,

13

*17 (citation omitted); see also Samet, 2013 WL 3124647, *8 (N.D. Cal. June 18, 2013) (declining

14

to dismiss evaporated cane juice claims under the primary jurisdiction doctrine). The Court

15

likewise denies the motion to dismiss as to the evaporated cane juice claims under the primary

16

jurisdiction doctrine in this case. The Court recognizes that other judges have concluded

17

differently. See, e.g., Hood v. Wholesoy & Co. et al., No. 12-cv-5550, 2013 WL 3553979 (N.D.

18

Cal. July 12, 2013). However, for the reasons set out in this Order, and because the weight of

19

authority in this District has declined to invoke the primary jurisdiction doctrine in cases nearly

20

identical, if not identical, to this one, the Court is persuaded that abstention is unwarranted.

21

The Court also declines to dismiss the Soy Milk Claims under the primary jurisdiction

22

doctrine. There is no evidence that the FDA is reconsidering the position regarding soy milk that

23

it has expressed in its warning letters. Moreover, the Court is not convinced that the FDA‟s

24

expertise is necessary to determine whether the labels are misleading. See, e.g., Jones v. ConAgra

25

Foods, Inc., 912 F. Supp. 2d 889, 899 (N.D. Cal. 2012) (rejecting application of primary

26

jurisdiction doctrine where “[t]he reasonable-consumer determination and other issues involved in

27

Plaintiff‟s lawsuit are within the expertise of the courts to resolve”).

28
14

1

F. Motion to Strike

2

The plaintiffs make various allegations regarding the use of the terms “natural” or “all

3

natural” on product labeling. FAC ¶¶ 58-67. But the plaintiffs have not alleged that the products

4

at issue make any “natural” or “all natural” claims. Trader Joe‟s thus argues that the Court should

5

“strike under Rule 12(f), as immaterial, those claims in paragraphs 58-67 that are limited to the

6

“all natural” allegation.” Dkt. No. 35 at 22. As the plaintiffs make no claims regarding the terms

7

“natural” or “all natural,” those allegations have no bearing on this action and paragraphs 58-67 of

8

the FAC are ordered stricken.
G. The UCL unlawful prong claims

9

The plaintiffs allege that Trader Joe‟s business practices are unlawful under the UCL

10

United States District Court
Northern District of California

11

because of Trader Joe‟s violations of the Sherman Law. FAC ¶ 121. The unlawful prong of the

12

UCL “borrows violations of other laws and treats them as unlawful practices that the unfair

13

competition law makes independently actionable.” Cel-Tech Commc’ns, Inc. v. Los Angeles

14

Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999) (internal citations and punctuation omitted).

15

Plausible allegations that food labeling violates the Sherman Law are sufficient to state a claim

16

under the unlawful prong of the UCL: “no more is required.” Trazo, 2013 WL 4083218, *9 (“To

17

state a claim under the „unlawful‟ prong of the UCL, Plaintiffs must allege plausible facts

18

supporting a finding that Nestle violated the Sherman Law.”) (citing Twombly, 550 U.S. at 547.
1. The Cane Juice Products

19

The plaintiffs allege two reasons that Trader Joe‟s use of evaporated cane juice is unlawful.

20
21

First, the plaintiffs cite the FDA standard of identity for yogurt, 21 CFR § 131.200, for the

22

proposition that “it is unlawful to use evaporated cane juice as an ingredient in yogurt.” FAC ¶

23

43. Trader Joe‟s responds that the FDA itself has recognized that evaporated cane juice is another

24

name for “cane sirup,”8 which is expressly permitted in yogurt. Trader Joe‟s is correct. 21 C.F.R.

25

Section 131.200 states that “any of the sweeteners listed in part 168 of this chapter” are permitted

26

in yogurt. In turn, 21 C.F.R. Section 168.130 lists “cane sirup” as one of those permitted

27
28

8

“Alternatively, the word „sirup‟ may be spelled „syrup.‟” 21 C.F.R. § 168.130.
15

1

sweeteners.
In their opposition, the plaintiffs argue that the term evaporated cane juice cannot be used

2
3

in yogurt; it is irrelevant that it is a synonym for “cane syrup,” which the plaintiffs concede is

4

permitted in yogurt. The Court is not persuaded. The FDA standard of identity for yogurt governs

5

what ingredients may be in products identified as yogurt; it does not govern what those ingredients

6

may be called. Accordingly, as evaporated cane juice is another name for “cane sirup,” which is a

7

permissible ingredient in yogurt, the plaintiffs have not stated a plausible claim that the Cane Juice

8

products violate the Sherman Law on that basis.
Second, the plaintiffs allege that the use of the term evaporated cane juice rather than sugar

9

or syrup products violates 21 C.F.R. §§ 101.3 and 102.5, which prohibits manufacturers from

11
United States District Court
Northern District of California

10

referring to foods by anything other than their common and usual names. FAC ¶ 46. The FAC

12

cites guidance and warning letters from the FDA indicating that the FDA policy “is that

13

sweeteners derived from sugar cane syrup should not be declared as „evaporated cane juice.‟” Id.

14

47-49. The FDA‟s guidance and warning letters “support the conclusion that Defendant has

15

violated the FDA‟s common and usual name regulations.9 Because the Sherman Law incorporates

16

federal standards, the FDA‟s statements support the conclusion that the Sherman Law‟s

17

requirements have been violated as well.” Kane v. Chobani, Inc., 12-cv-02425-LHK, 2013 WL

18

3776172, *4 (N.D. Cal. July 15, 2013). Accordingly, the plaintiffs have stated plausible

19

allegations that the use of the term evaporated cane juice violates the Sherman Law.
2. The Unspecified Products

20
21

As noted above, the FAC lacks any allegations regarding the Unspecified Products. The

22

plaintiffs have thus failed to plead plausible allegations that the Unspecified Products violate the

23

Sherman Law.
3. The Soy Milk Products

24
25

The plaintiffs allege that the labeling for Organic Soy Milk is unlawful because it does not

26

contain milk from a cow, contrary to the FDA‟s standardized definition of milk, 21 C.F.R. Section

27
9

28

As noted below, Trader Joe‟s argument that the guidance and warning letters are nonbinding is
beside the point.
16

1

131.110, which defines milk as “the lacteal secretion, practically free from colostrum, obtained by

2

the complete milking of one or more healthy cows.” See FAC ¶¶ 73-77. In support, the plaintiffs

3

cite two warning letters from the FDA to third parties where the FDA noted that it does “not

4

consider „soy milk‟ to be an appropriate common or usual name because it does not contain

5

„milk.‟” FAC ¶¶ 75-76. The warning letters in turn cite the FDA‟s standardized definition of milk

6

in 21 C.F.R. Section 131.110. FAC ¶¶ 76-77.

7

Trader Joe‟s argues that the warning letters cannot form a basis for the plaintiffs‟ claims

8

because the warning letters “are not binding.” Trader Joe‟s is correct that FDA warning letters are

9

not binding. As the FDA Regulatory Procedures Manual states, “A Warning Letter is informal
and advisory.” FDA Regulatory Procedures Manual § 4-1-1; see also CytoSport, Inc., 894 F.

11
United States District Court
Northern District of California

10

Supp. 2d at 1293-94 (“FDA warning letters are informal and advisory, and do not amount to an

12

FDA action.”); Summit Technology, Inc. v. High-Line Medical Instruments, Co., 933 F.Supp. 918,

13

934 n.9 (C.D. Cal. 1996) (“FDA regulatory warning letters do not constitute final agency action”).

14

But the unlawful violation alleged by the plaintiffs is that Organic Soy Milk violates 21 C.F.R.

15

Section 131.110 because Organic Soy Milk does not contain cow‟s milk; not that Trader Joe‟s has

16

violated the warning letters. As the warning letters are not binding and are advisory, they do not

17

establish conclusively that Organic Soy Milk is misbranded in violation of 21 C.F.R. Section

18

131.110. However, in light of the warning letters, it is plausible that Organic Soy Milk is

19

misbranded because it does not contain milk from a cow. This “nudge[s] [the plaintiffs‟] claims

20

across the line from conceivable to plausible.” Twombly, 550 U.S. at 547.

21

H. The plaintiffs’ causes of action

22

The plaintiffs‟ first cause of action alleges a violation of the unlawful prong of the UCL.

23

As stated above, the plaintiffs have adequately stated a claim that the Cane Juice and Soy Milk

24

products violate the Sherman Law.

25

The plaintiffs second through sixth causes of action are based on violations of the unfair

26

prong of the UCL (second cause of action), violations of the fraudulent prong of the UCL (third

27

cause of action), misleading and deceptive advertising in violation of the False Advertising Law

28

(fourth cause of action), untrue advertising in violation of the False Advertising Law (fifth cause
17

1

of action), and violations of the Consumers Legal Remedies Act (sixth cause of action). The

2

second through sixth causes of action are subject to the heightened pleading requirements of Rule

3

9(b) and the “reasonable consumer” test and all fall together. To the extent that they are based on

4

labeling associated with the Unspecified Products, Organic Lowfat Strawberry Yogurt, Enchilada

5

Sauce, or the No Additives Products, they are not pleaded with the requisite particularity. To the

6

extent that they are based on labeling associated with the Cane Juice or Soy Milk Products, they

7

fail the reasonable consumer test.
CONCLUSION

8
9

Trader‟s Joe‟s motion to dismiss or, in the alternative, to strike, is GRANTED IN PART
and DENIED IN PART. The motion to dismiss is DENIED as to the plaintiffs‟ first cause of

11
United States District Court
Northern District of California

10

action to the extent that it is predicated on violations of the Sherman Law. For the reasons stated,

12

the plaintiffs have adequately pleaded that the Cane Juice and Soy Milk products violate the

13

Sherman Law. The plaintiffs‟ second through sixth causes of action under the UCL, FAL and

14

CLRA are DISMISSED WITH LEAVE TO AMEND. The plaintiffs‟ seventh cause of action for

15

restitution is DISMISSED WITH PREJUDICE. Paragraphs 58-67 of the FAC are ordered

16

stricken. The plaintiffs may file an amended complaint within 20 days of this Order. The Court

17

expects that any amended complaint will follow the guidance set forth in this order, including as it

18

relates to clearly setting forth which alleged products and representations relate to which theories

19

of liability and which causes of action.

20
21

22
23
24

IT IS SO ORDERED.
Dated: October 4, 2013
______________________________________
WILLIAM H. ORRICK
United States District Judge

25
26
27
28
18